Second quarter 2016 credit card processing volumes were the fourth highest in company history, with the number of transactions processed up 4% over the second quarter of 2015. Credit card dollars processed during the second quarter of 2016 decreased 4% compared to the same time period in 2015.

Electronic check transaction (ACH) volumes during the second quarter of 2016 were down 17% over the same time period in 2015. Returned check transactions processed during second quarter of 2016 were down 31% compared to the second quarter of 2015 but were somewhat offset by increasing adoption of the higher margin e-check verification service.

Total dollars processed for the second quarter of 2016 exceeded $683.4 million.

Management Commentary

“Our total transactions and dollars processed were down versus the second quarter of last year due to lower activity within our current customer base,” said Louis Hoch, President and COO. “We are taking aggressive measures to remedy the lower activity. One of those steps is to add more processing capability. We believe that our recently announced expanded ACH network capacity will both increase traffic from existing merchants as well as help us to attract new clients to our platform. This reinforces our commitment to execute on the organic growth strategies that we previously announced — expanding our ACH, credit card and prepaid card customer base. We expect to release further announcements on our progress in our growth areas in the near future.”

About Payment Data Systems, Inc.

Payment Data Systems, Inc. (NASDAQ:PYDS), a leading integrated payment solutions provider, offers a wide range of payment solutions to merchants, billers, banks, service bureaus and card issuers. The Company operates credit, debit/prepaid and ACH payment processing platforms to deliver convenient, world-class payment solutions and service to their clients. The strength of the Company lies in its ability to provide tailored solutions for card issuance, payment acceptance, and bill payments as well as its unique technology in the prepaid sector. Payment Data Systems, Inc. is headquartered in San Antonio, Texas, and has offices in New York, New York; and Los Angeles, California.

Except for the historical information contained herein, the matters discussed in this release include certain forward-looking statements, which are intended to be covered by safe harbors. Those statements include, but may not be limited to, all statements regarding our management’s intent, belief and expectations, such as statements concerning our future and our operating and growth strategy. Investors are cautioned that all forward-looking statements involve risks and uncertainties including, without limitation, the factors detailed from time to time in our filings with the Securities and Exchange Commission. One or more of these factors have affected, and in the future could affect our businesses and financial results in the future and could cause actual results to differ materially from plans and projections. We believe that the assumptions underlying the forward-looking statements included in this release will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that our objectives and plans will be achieved. All forward-looking statements made in this release are based on information presently available to our management. We assume no obligation to update any forward-looking statements, except as required by law.